Lebanon might receive $900 million from the International Monetary Fund (IMF) around two months from now, caretaker Finance Minister Ghazi Wazni announced on Wednesday.
Wazni said he was informed that the Executive Board of the IMF had discussed the proposal to allocate Special Drawing Rights to member states, amounting to $650 billion in total.
The proposal has since been referred to the Board of Governors, which will be reviewing it in July.
If the proposal gets approved, the allocation process will take place toward the end of next August. Lebanon is expecting to receive a share of $900 million upon approval, according to Wazni.
Special Drawing Rights (SDR) is an international reserve created and maintained by the IMF. SDR is used to supplement the official exchange reserve assets of IMF member countries, which include Lebanon.
According to the IMF, “the SDR is not a currency. It is a potential claim on the freely usable currencies of IMF members. As such, SDRs can provide a country with liquidity.”
As it reels from the worst financial crisis in its history, Lebanon is in great need of liquidity. Rationing the subsidy of essential commodities is one of the ways the Lebanese authorities are planning on reducing the strain on dwindling foreign currency reserves.
Soon after the sugar subsidy was lifted, the Lebanese Central bank’s fuel subsidy was partially removed, causing fuel prices to increase.